Franchise Agreements I Petroff.law I French business law | Petroff.law
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Are you planning to set up a franchise in France?

We have more than 20 years experience in commercial and franchise contracts in France. We can help you set up your franchise network in France. 

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How to create a network of franchisees in France?

We are here to help. We can help you comply with all French law requirements applicable to franchising.

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How to choose your franchisee in France 

A franchisor is free to enter into a franchise contract with any person who meets the criteria set by the franchisor for becoming a franchisee.

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Such criteria must however be objective, qualitative and quantitative, determined in a uniform manner for all prospective franchisees and applied in a non-discriminatory way.

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Instead of franchising its business to multiple franchisees, the franchisor may decide to a appoint a master franchisee in France, to whom it will grant the right and obligation to establish a franchise network. In this case, a master franchise agreement will be entered by the franchisor with a master franchisee in France, the latter being in charge of establishing the network of franchisees under the control of the franchisor.

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We may help you determine the most appropriate structure for setting up a franchise network in France.

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We may also help you determine whether the prospective franchisee offers all necessary guarantees for becoming your franchisor in France, by conducting a due diligence on its status and activities.

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What pre-contractual information must be disclosed to Franchisees in France ?

Pursuant to articles L. 330-1 and R. 330-1 of the French Commercial Code, a Franchisor is required to disclose to the franchisee certain pre-contractual information, which includes:

 

  • the seniority and experience of the franchisor company,

 

  • the state of the relevant market and the prospects for its development,

 

  • the importance of the network of franchisees,

 

  • the duration, the conditions of renewal, termination and assignment of the contract,

 

  • the scope of the exclusivities required or granted by the franchisor,

 

  • information relating to the franchisor’s trademarks.

 

Failure, by a Franchisor, to disclose the required pre-contractual information to the prospective franchisee at least 20 days before the signature of the franchise contract is punishable by a fine.

 

In addition, in the event that the information is considered insufficient or untrue, the franchisee may apply for the cancellation of the franchise contract and the refund of all sums paid to the franchisor.

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We can help you prepare the information to be disclosed to franchisees so that it complies with the pre-contractual disclosure requirements of French law.

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How to license your IP and know-how to the prospective franchisees?

The trademark is an essential element of a franchise agreement. A franchise agreement cannot exist without a trademark or if the trademark is no longer valid or has been transferred by the franchisor to a third party without the consent of the franchisee. (French Supreme Court, decision of January 31, 2012, n°10-27.603).

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The trademark is an essential element of a franchise agreement. A franchise agreement cannot exist without a trademark or if the trademark is no longer valid or has been transferred by the franchisor to a third party without the consent of the franchisee. (French Supreme Court, decision of January 31, 2012, n°10-27.603).

 

The same is true for know-how. The franchisee must sell the franchisor's products and services to its customers in accordance with the know-how of the franchisor. The franchisor must therefore disclose its know-how to the franchisee and provide advice and assistance (French Supreme Court 8 June 2017, n° 15-22.318).

 

The franchisor is bound by a requirement of commercial success during the entire duration of the contract, which he must fulfill by updating its know-how, capacities and commercial technique, and by ensuring that they are properly understood by each franchisee (Court of Appeal of Douai, 9 June 2007, n° 06-1777).

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We can assist you in protecting and enforcing your trademarks, know-how and other IP in France, and in licensing them to your franchisees.

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How to make your franchise agreement compliant with French laws ?

If your franchise agreement is subject to foreign law and you would like to localise it for use in France, you should pay specific attention to the following :

 

  • the concept of contractual balance ("équilibre contractuel"), as French law imposes sanctions on franchisors whose contract is significantly unbalanced to the detriment of the franchisee,

 

  • French regulations on price determination, which prohibit the imposition of a minimul resale price as well as resale at a loss,

 

  • French and EU regulations on exclusivity, according to which exclusivity may contractually be granted for a maximum term of 10 years, it being also specified that passive sales restrictions are prohibited, 

 

  • Non-compete obligations, which are valid subject to certain conditions of territory, duration and proportionality (art. L. 341-2 of the French Commercial Code),

 

  • Other provisions which are specific to French law.

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Failure to comply with French law provisions on contact and freedom of competition may expose the franchisor to sanctions (including criminal, if anti-competitive practices have been committed), and lead to the cancellation of the franchise contract and/or indemnity claims from the franchisee.

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We can help you prepare a franchise agreement compliant with french and EU law.

More on Franchise in France

Who We Are?

We are here to help. We can help you comply with all French law requirements applicable to franchising.

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Mariela Petrova

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Attorney at law registered with the Bar of Paris

Commercial law and contracts, Corporate Law, Litigation

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Gala Paricheva

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Attorney at law registered with the Bar of Paris

Intellectual Property, French & EU Trademarks, GDPR, Litigation

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